Apple likely to shaft Dialog Semiconductor

Fruity cargo-cult Apple is preparing to shaft yet another of its partners in a desperate deal to keep its iPhone cash-cow mooing.

Dialog Semiconductor is about to lose a crucial supply deal with Apple, according to a financial analyst who cut his rating on the stock on Tuesday.

The Anglo-German chipmaker's shares went down the loo on the back of the announcement as the company was rather too dependent on Apple. To be fair Bankhaus Lampe reduced its rating on Dialog to "sell" from "hold" as it argued that Apple was working on its own battery-saving chip for the iPhone that could replace Dialog's power management integrated circuits (PMIC) as early as 2019 which is someway off.

However, Dialog is addicted to Apple cash and accounted for more than 70 percent of Dialog's 2016 sales.

The German company says it is the world's top maker of power management chips used in smartphones with 20 percent of the market.

Dialog said it saw no business reason for the share drop and that it remained comfortable with its financial outlook for "good revenue growth" in 2017, which would mark a recovery from a 12 percent decline last year.

This would be the second supplier which Apple has spectacularly knifed. Recently it shafted Imagination Technologies with its plan to replace its graphics chips with parts it is developing in-house.

Bankhaus Lampe cited unnamed industry sources as saying that Apple was setting up power management design centres both in Munich and California and said Apple already had around 80 engineers working on a power management chip of its own.

"In our view, there is strong evidence that Apple is developing its own PMIC and intends to replace the chip made by Dialog at least in part", Bankhaus Lampe analyst Karsten Iltgen said.

Apparently, Apple is poaching top Dialog engineers in Munich so that it has the knowledge in place to build the chip. Of course, there is no sign that its new team will manage the job.

Apple would need to hire more than 1,000 engineers to completely replace the power management chips supplied by Dialog.

However, Jobs' Mob is desperate to increase its margins on its iPhone cash cow. The numbers of iPhone sales are starting to fall and the only way the company can pretend to be on top of things is if its profits and margins are up. Even if it does not manage to make the chips itself, it can always threaten its existing suppliers with the move.